Creating Blue Oceans

Jills slidesBlue Ocean?

Guy Laliberte

Cirque de Soleil

• Created a new market space• New target audience• Eliminated star

performers and animals• Blended opera and ballet

Impact of creating blue oceans

•In Search of Excellence- published 20 years ago

• 2 years of publication, several companies slipped •2/3 firms had fallen

Are there lasting “excellent” or “visionary” companies that continuously outperform the market and repeatedly create blue oceans?

• Built to last• sought out the “successful habits of visionary companies”• followed same foot steps

How to Have a Strategic Move• Managerial actions• Managerial decisions

Examples • Ford• GM• CNN

Analysis of Becoming a Blue Ocean Company• No distinction between the two groups• Achieved by small and large companies• Young and older managers• Attractive and unattractive industries• The analysis failed

The Cornerstone• Value Innovation• Equal importance of value and innovation

• Value Creation• Creates value without innovation• Does not stand out in marketplace

• Innovation Without Value• Technology-driven, market pioneering, futuristic• Product that is more advanced than what consumers are

ready for.

Value Creation

• Used Jordan’s Image • Created

Value on Shoes

• Innovative Technology• Little value

created • Market

pioneering

Value Innovation• Aligns innovation with• Utility• Price• Cost

• Ignores value-cost trade-off• Pursues differentiation and low-cost• Not just about innovation• Whole system approach

Atari Corporation: PONG

•Tennis Sports Game•Led to the start of the video game industry

Value Innovation: Cornerstone of Blue Ocean Strategy

•Cost savings are made by reducing the factors an industry competes on

•Buyer value is lifted by raising and creating elements the industry has never offered

Circus Market• Shrinking circus market• Circuses used benchmarking to compete• Best clowns and lion tamers

• Pushed up costs• No increased revenue

• Resulted in drop in demand for traditional circus

Cirque du Soleil• New form of live entertainment• Attracts adults and kids• Kids - circus market• Adults - theater market• Great combination for families

• Circus/Theater• Combined excitement of circus with the “intellectual

sophistication and artistic richness” of the theater

Cirque du Soleil Circus• Clowns• More sophisticated• Less slapstick

• Tent• Prettier outside• More comfortable inside

• Acrobats• Made more elegant and

artistic

Theater• Created theme• Story line

• Different productions• Included original and

unique score• Featured dance• From theater and ballet

Cirque du Soleilhttp://www.youtube.com/watch?v=GB5MvTy-JTk

Blue Ocean• Cirque du Soleil created a blue ocean• Drew from circus market• Drew from theater market• No direct competitors• Priced against theater tickets

• Aligned innovation with utility, cost and price

Importance of Blue Oceans• Accelerated technological advances• Improved productivity• Wide range of products and services• Supply exceeds demand

• No evidence of demand increase• Brands are becoming similar• Hard to differentiate• Select based on price

Formulating and Executing Blue Ocean Strategy• Always involves opportunity/risk• Red Oceans continue to dominate• Playing field is unbalanced in favor of tools and analytical

frameworks

Formulating and Executing Blue Ocean Strategy

Can anyone give an example of a company that used blue ocean strategy?

Class Takeaways